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Which Start-Ups Are Most Likely to Make It in New York?


Even with high taxes and business costs, social media and financial technology entrepreneurs are finding success in the Big Apple.

New York's high tax rates and exorbitant cost of doing business, one would imagine, act as strong deterrents to entrepreneurs.

However, with the two traditionally dominant New York City industries, media and finance, having laid off thousands of people, a great space seems to have opened up for budding entrepreneurs.

"If you look at what's happening in New York City right now in the banking sector, we're seeing a lot of engineering talent divisions being laid off. On the other side of that, the talent war has really heated up with people like Facebook, LinkedIn (LNKD), [and] Google (GOOG) setting up engineering offices in New York. A lot of the social media start-ups are really flourishing here," said Ryan Terpstra, founder and CEO of Selerity, a company that delivers real-time financial news using innovative technology.

Another sector doing well is financial technology (or fintech). Terpstra explained that when he was setting up Selerity, being in New York was important because it was here that he was able to network and meet venture capitalists like Roger Ehrenberg, who previously served on Selerity's board, and other wealthy angel investors to raise money for his business.

"You have really prominent [startup incubators] like Betaworks and Tech Stars that have really opened a lot of doors, where you can get access to really successful entrepreneurs and really successful venture capitalists. New York City's on par with any city in the world for entrepreneurship in terms of engineering," he opined.

Terpstra was speaking at a panel organized by the MIT Enterprise Forum of New York City. The panel, titled FinTech Leaders: Navigating Rough Seas and Uncharted Courses to Great Success, was held at Microsoft's (MSFT) offices in midtown Manhattan.

Other panel speakers included Philippe Buhannic, CEO of TradingScreen; Peter Lehrman, CEO of AxialMarket; and Minyanville's own Todd Harrison. Larry Kramer, founder and former CEO of MarketWatch (NWS), was the event moderator.

Lehrman agreed with Terpstra that New York is "a great location to build a company," adding that the financial crisis of 2008 actually helped startups, especially with scouting for talent.

"From a talent perspective, Wall Street pays better than Internet startups. I think one of the challenges Internet software companies faced in New York in prior decades was competing with banks, and even financial technology firms that sell very heavily into banks, for New York engineering talent. You don't really have that problem in San Francisco or the Bay Area. You're going up against Google, but you're not going up against Wall Street organizations and Wall Street compensation ranges, which are fundamentally different.

"So I think the demolition of a lot of investment banks in the past few years has been good because it has opened a lot of doors for true Internet entrepreneurship to emerge in New York," said Lehrman.

The panel's optimism about New York as a good business incubator was confirmed by a recent report by the Startup Genome Project, which crowned the city as the world's No. 2 location for startups behind Silicon Valley, based on data provided by over 16,000 startups around the world.

With regards to the high costs associated with starting a business in New York, Buhannic pointed out that in the fintech industry, you have to be based in a global city like London or Tokyo, and compared to these cities, New York is actually not that expensive:
At one point, for the price of two hires in New York, you get one in London. So New York has a strong advantage here. You can find great engineers everywhere. That is true. But for our business, New York City is still absolutely essential to us. It's still where 60% of all the financial innovations happen. In terms of the quality of the people you can find here, their experiences in the market, the way you can leverage an incredible amount of business knowledge, the city is irreplaceable. It's that simple.

Twitter: @sterlingwong
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